After a tight first set, Federer was outplayed and outgunned by the world number one, beaten 7-6(4) 6-3 6-3 as the Spaniard set up a final with another Swiss, Stanislas Wawrinka.

"It's very encouraging, no doubt," the 32-year-old told reporters. "Wish I could have won here tonight and given an all-Swiss final. That's something I'll regret for a long time.

"But I think this is a very good start to the season for me overall. I played some really good tennis here. I still feel my best tennis is only ahead of me right now.

"So I'm looking forward to the next couple of months, how they're going to play out and hopefully by April I feel like I'm going to be at 100 percent again."

The 17-times grand slam champion had beaten Jo-Wilfried Tsonga and Andy Murray on his way to the semi-finals.

Feeding off the influence of coach Stefan Edberg, who joined his team at the beginning of the year, Federer said he planned to take the game to Nadal and move forward at every opportunity.

But Nadal, who shrugged off a nasty blister on his left hand, was too strong, too persistent and too good.

"He did a good job," Federer said. "He didn't make many errors, even though I was trying to hit hard and flat.

"I tried to play my game. Sometimes I did play very well and sometimes I didn't. But he overall was more consistent. He deserved to win tonight. I mean, he was better."

Federer said he had handed the advantage to Nadal by not doing enough on his return games and needed to win the first set to impose his will.

"If you get the lead at least in the first or second set, at one point maybe I can also play a bit more freely, do a bit more what I was hoping to do, play a bit more aggressive," he said.

"I tried a few things but Rafa does a good job of neutralising you. At times I couldn't quite do what I wanted to do, but that's because of Rafa."

Federer will now drop to eighth in the world rankings but said he was pleased how he had been able to play freely over the whole tournament, having struggled with a back problem for much of 2013.

"What I like to do is I like to take it to the guy, I like to be in command," he said. "That's what I was able to do now the last couple of weeks, so that's very encouraging.

"That's why I'm not too disappointed tonight because I feel it's been a good start.

"I've come from far back. I didn't have surgery like Murray had or like Rafa, being out seven months.

"But I played with something that has been going on for a while. This is a step in the right direction, and that's the way I want to go. I have a belief this could be a very good year for me again," he said.